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Audit: MassHealth Paid for $9 Million in Unallowable and Excessive Drug Tests

BOSTON, MA — State Auditor Suzanne M. Bump today announced an audit of MassHealth, which found thousands of unallowable and unnecessary drug tests that are costing the Commonwealth millions of dollars annually in Medicaid expenses.

MassHealth, with expenditures of over $11 billion, provides access to healthcare services for approximately 1.3 million eligible low- and moderate-income individuals annually. MassHealth pays for drug tests as long as the tests are ordered by a physician who is actively treating the member and is being requested for a medically necessary reason. In FY 2012, MassHealth paid for more than 839,000 drug tests costing the program $18 million. Today’s audit report found millions of dollars spent on excessive drug testing and tests that were not being used for diagnosis, treatment, or other medically necessary reasons.

“Medical testing should only be performed when there is medical necessity,” said Auditor Bump. “Clearly millions of dollars has been spent on drug tests that have done little to help addicts in recovery but much to increase revenues for testing companies.”

Contrary to guidelines set by the federal Substance Abuse and Mental Health Services Administration, the audit found MassHealth members being tested at a high frequency – every day or every other day – for periods sometimes exceeding a year. During a three-year period, 6,282 MassHealth members received more than the recommended eight tests per month, for a total cost of $24.3 million. The report says MassHealth could have saved approximately $7.8 million in the same period had it more actively monitored the frequency of drug tests and ensured that tests were medically necessary.

According to the audit, substance abuse professionals stated some testing occurred because they were pressured by laboratories and sober houses to sign orders requiring frequent testing. These clinicians said that if they did not sign the orders, their patients would be removed from housing or directed to other physicians who would authorize the tests.

The report also identified $1.3 million in unallowable drug tests conducted at the UMass Memorial Medical Center (UMMMC). These tests were performed for residential monitoring by sober homes, which provide housing for people recovering from substance abuse disorders. UMMMC officials said they were preparing to repay the Commonwealth the full amount.

Other findings include:

Three laboratories (Precision Testing Laboratories, Inc.; Lab USA Inc.; and New England Pain Institute) used a deceptive billing practice, known as unbundling, to circumvent price limits and overcharge MassHealth $4.5 million for four fiscal years.

MassHealth spent $7 million on certain tests, such as alcohol urine testing, that are commonly considered medically unnecessary by the substance abuse treatment community.

MassHealth’s claims processing system does not adequately prevent and deny payment for duplicate drug tests. Auditors found 16,441 instances of MassHealth paying for multiple drug tests for the same member on the same day totaling $313,623.

Auditor Bump has called on MassHealth to recover more than $6 million from laboratories reviewed in the report and to apply stricter oversight on its payments for drug tests. MassHealth has responded positively to audit findings and has already begun implementing new policies in line with the Auditor’s recommendations.

“MassHealth is doing right by implementing better standards, system controls, and monitoring activities to detect and deny excessive drug testing. This will help ensure that the Commonwealth’s limited resources are used for effective patient treatments,” said Auditor Bump.

The Office of the State Auditor conducts technical and performance assessments of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency.

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